Unemployment for Nevada’s young workers hits 21.8 percent

Victor Joecks

What results when you combine an epic failure of a stimulus with Nevada’s minimum-wage law? High unemployment that disproportionally affects Nevada’s youngest and most unskilled workers.

The Nevada Department of Employment, Training and Rehabilitation, which tracks the jobless rate, says March data show 21.8 percent of 16 to 24-year-olds were unemployed. The rate, calculated over a 12-month moving average, is almost twice that of older age groups…

And for many people this year, the stakes are higher. Jobs are needed not simply to stay busy or earn spending money but to help pay the family bills.

“We’re seeing more turmoil, family stress and teens competing with older people for fewer jobs,” said Erik Schoen of Community Chest Inc., a Virginia City-based nonprofit resource center for rural counties in northwestern Nevada.

“For teens, there are no magic bullets. They are at a disadvantage with not a lot of experience.” [Emphasis added]

Are the failed stimulus and Nevada’s well-intentioned but misguided minimum-wage laws the only factors affecting young-worker unemployment? Of course not – the economy is enormously complex. But the minimum-wage law is a factor that is depressing youth employment.

Why the minimum increases unemployment
Young workers (in Nevada, the state minimum wage doesn’t apply to those under 18) have little to no experience and little to no skills, because they are just starting their careers. In essence, they are not able to provide the same level of value as someone who’s proven himself or has greater skills (older workers).

In a free market, this leads to younger workers being paid less, because they provide less value to their employers. As their experience and skills increase, however, they become more valuable and worthy of a higher salary. If their current employers don’t increase their pay, they can work for another employer who will pay them more, or they can start their own businesses.

While it’d be nice to pay every employee more regardless of his abilities, this would lead to businesses or (governments!) going bankrupt. What happens instead is that younger and unskilled workers just aren’t able to find work, which can stunt their earning potential for up to 10 years.

Unfortunately, the news isn’t getting better. I called the Nevada Department of Employment, Training and Rehabilitation this morning, and they told me the unemployment rate for young workers jumped to 24.1 percent in April.

For anyone not familiar with Nevada’s minimum-wage law, the RJ had a good description this morning.

Since then, the state’s minimum wage has jumped more than 40 percent — and will go up again on July 1 to $7.25 for those who have worker-paid health insurance. The minimum wage for those who have no such insurance will be $8.25. (The difference is a result of Big Labor’s push to punish employers that don’t provide health insurance.)

To be fair, the federal minimum wage also has increased – so the problem isn’t just with Nevada. But our state law has exacerbated the problem.